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Recurring misconceptions in TOLATA cases

Barrister and Arbitrator

At a distance, cohabitation disputes
involving constructive trusts, proprietary estoppel and applications under the
Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) look very much
like a 'family law' dispute. However, close up, they are very different
creatures indeed.

Whereas in a financial remedy claim (on
divorce) you can (broadly speaking) tot up the assets and divide by two, a TOLATA case can end up being all or
nothing. Few financial remedy cases depend upon who said what years ago – they
are largely forward looking and the court paints justice with a broad brush.
This means that family lawyers are not generally used to preparing statements
in which minute levels of detail need be recorded. It is enough to give a broad
picture. A TOLATA case is backward looking
and cares little for fairness. It often turns on who is to be believed about
who said what. The fine detail of evidence can paint a picture which may make
the difference between winning and losing. This requires a different approach
to a financial remedy case.

As is well documented, there is no such
thing as a common law wife (save in a narrow set of circumstances beyond the scope of this note) and the absence of a statutory scheme for cohabitees
has been described as the black hole of family law. However, the consequence of
this is that cohabitants must fall back on the general law, in particular
relying upon equitable doctrines. Unlike the Matrimonial Causes Act, which
simply (?!) enjoins the court to be 'fair' to the parties, a TOLATA application
is, generally, seeking to discern the parties’ 'intentions'. So family lawyers
need to stop thinking about what is fair in-the-round and concentrate instead
on what intentions can actually be proved on the balance of probabilities.

Numerous
TOLATA applications go awry before they are even properly off the starting
blocks. If you are on the brink of a TOLATA dispute, you might like to consider
the following.

If there is an express
declaration of trust then that is (usually) the end of the matter, unless the
trust can be set aside for one of the usual vitiating factors. For conveyances
since April 1998 in Form TR1, there is a box which requires co-purchasers of
land to declare their beneficial interests. Get the executed TR1 from the Land Registry.
If the conveyance was before April 1998 the form of conveyance did not usually
contain a declaration of trust – but some conveyances had bespoke clauses.
Always get the conveyance and also check to see if there was any subsequent
declaration of trust made after purchase.

Contributions are often an
indication of what the parties’ intentions may have been. The law is seeking to
discern what the contributions say about intentions, they are not an end in
themselves. Clients can sometimes be woolly and/or contradictory in how they
categorise a sum of money. It may have been a contribution to purchase price,
it may have been a gift or a loan. These three types of 'contribution' are
likely to have profoundly differing effects on the outcome. Make sure that the
lay client understands the difference between these and is absolutely clear in their
instructions to you.

Too often open correspondence
limps on for months in which various assertions and counter assertions are
developed. It is a cross-examiner’s paradise. The account needs to be correct
from day one. Consistency matters.

The detail matters. Countless
instructions, open letters, and (more grievously) statements of case and/or
evidence baldly assert, 'the parties agreed that...' This is not good enough –
the law here requires particularity. What precisely was said, when was it said,
how was it said, where was it said, what else was going on, was anyone else
there, what was the reply? This can take hours to properly iron out. Too often
a letter before action makes vague assertions which will not come anywhere near
meeting the evidential hurdle to persuade a court on the balance of
probabilities and to which no meaningful reply can be given. Such vague
assertions do not provide the foundation of any negotiation. Detail, detail, detail.

Whether it be a constructive
trust or estoppel claim, the law is looking for detrimental reliance, in light
of agreements and/or representations and/or a common understanding. The
detrimental reliance needs to be made out on the evidence. It is not enough to
simply have a representation left swinging in the wind.

A clear view needs to be had
about what discussions post-separation are admissible and those which benefit
from the cloak of without prejudice privilege.

There is sometimes a
misconception about how complicated these proceedings can be and when the costs
need to be incurred. In financial remedy proceedings, there is often a flurry of activity after the
case has started, just before a First Appointment or a FDR. In a TOLATA case
the thinking needs to be front-loaded and undertaken prior to commencement of
proceedings (and preferably before the sending of a pre-action protocol
letter). Solicitors unfamiliar with this area of work can be surprised by
quotes emanating from chambers for a pre-action conference. It is often the
case that the issues are someway more knotty than the instructions give credit
for. Counsel might be seeing problems (eg consequences of illegality) which
are not yet fully appreciated. In that conference, aside from all the legal and
procedural issues, counsel needs to see and hear what the client has to say?
What kind of impression is the client going to make to a judge? Is this is case
which will stand up in court? What are the risks? As they say, a stitch in
time...

This is risky litigation. Your
client may come away with nothing but a huge costs bill for your costs and the
other side’s costs. Detailed attendance notes are absolutely essential. They
need to accurately record the substance and detail of what has been discussed. Counsel’s
written advice, with the benefit of a conference, should be on the file. It
will cover the bases and make clear the risks. No client should ever be allowed
to go into the witness box without having been comprehensively and clearly
warned as to the potential consequences of what they are doing.

Too often, in the
'family/civil' domain, cases get issued without enough thought as to what is
required for a Part 7 or Part 8 claim. A part 7 claim requires a particulars of
claim. This is not a statement of evidence. A Part 8 claim requires all
evidence to be filed in support. In either event this writer sees too many
claims where the necessary detail is just not there; subsequent attempts at
amendment can just look (correctly) like
counsel trying to get a cart out of a ditch. If a family department is not used
to drafting such claims then approach counsel before you have taken significant
steps, and not after.

In civil proceedings the costs
matter almost as much (and sometimes more) than the substantive dispute. Family
lawyers, whose natural environment usually starts with a 'no order as to costs'
presumption, need to think at every point in the case 'and what may be the
costs’ consequences of this?' The completion of Precedent H (not the FPR Form H!)
is a complicated art. Family departments/firms do not usually have the
necessary experience to do this properly.
Often costs are under-estimated, which runs the risk that costs may not
be recovered in due course. Family lawyers, in this writer’s view, should be
sending their Precedent Hs to costs’ draughtsmen.

With costs and the risk of costs many of
these cases will never fight through to a trial. There is too much at stake on
either side. ADR/DR/NCDR (however it is now to be described) is the order of
the day. However, in order to avoid
litigation and bring matters to a speedier conclusion, a great deal of front-loaded
work must be undertaken to properly understand a party’s case.

Once
this work has been undertaken, and the correct 'parish' of the case identified,
more intuitive, soft skills and negotiation can return to the fore, in order to
(hopefully) bring about an early settlement. Mediation using the civil model,
where the lawyers might be present, may well be more appropriate than the
family model. If the problem remains knotty then consider family arbitration,
which does not typically (unless the parties so wish) have a costs’ shifting
jurisdiction. This allows for a bespoke and private adjudication of contentious
issues, without the complexities and hazards of CPR compliance.